KUALA LUMPUR: CJ Century Logistics Bhd's core profit after tax, amortisation and minority interest (Patami) of RM7.3 million in the first half ended June 30 2024 has fallen short of projections.
MIDF Research said this represented only 23 per cent and 30 per cent of its and consensus full-year estimates.
The negative deviation was primarily due to lower-than-expected profit margins, it added.
MIDF Research said the core Patami of RM3.5 million (down 53.0 per cent year-on-year) in the second quarter saw a decline of over half.
This was mainly due to a lower contribution from the total logistics services (TLS) segment.
This resulted from the correction in market freight rates and a decrease in shipment volume, further compounded by increased operating expenses.
The drop was partly cushioned by the procurement logistics services (PLS) segment, which saw a rise in assembly volume and exports of electronics and electrical products.
"On a quarter-on-quarter basis, core Patami fell by 6.2 per cent primarily due to the reduced freight volume," MIDF Research said.
The TLS segment, particularly freight forwarding, is expected to face challenges in 2023 due to the slowdown in South Korea's trades.
The country's July exports fell 16.5 per cent yoy in July, marking the sharpest decline in over three years.
South Korean clients contribute 30-35 per cent of the company's revenue.
This impact is further heightened by the global freight rates returning to normal levels.
However, the PLS segment is set to stay strong with China's reopening ensuring a steady supply of electronic components, MIDF Research noted.
The firm kept its "Buy" call on CJ Century with a lower target price of 55 sen from 95 previously.